Holiday Returns, Supply Chains & Reverse Logistics

Black Friday and Cyber Monday are now in the record books and the initial results are in: $6.22 billion was spent online by the end of Black Friday, an increase of 23.6% year over year; Cyber Monday spending rose 19.3% year over year to a record $7.9 billion by the end of the day, making it the biggest online shopping day of all time in the U.S. — well past last year’s $6.6 billion (also a record). The NRF projects that total holiday sales should reach around $720 billion with $123 billion of that sold online. On the flip side, the NRF reports that 11-13% of holiday purchases are returned; that means around $90B in merchandise will be returned. Whether buyer’s remorse or gift-recipient dislike, retailers need to be prepared for this onslaught of returns or otherwise risk supply chain disruptions, warehouses hitting capacity, and increased processing and shipping costs. Research indicates that it costs twice as much to process an online return as it does to sell it. And with 20% of all returns taking place at Christmastime, retailers should already have a reverse logistics plan in place to recover costs and keep the supply chain rolling.

Supply Chain Dive reports just 3% of retailers cited reverse logistics as their biggest supply chain investment in 2018. Instead, there has been more investment in customer facing systems; like apps consumers can use to start the return process for items purchased online that can be returned in-store. While retailers are appealing to consumers with lax return policies, they must be prepared to handle those returns. Traditional liquidation methods no longer prove viable when dealing with nationwide, or even worldwide returns that are on the scale of hundreds of millions of dollars. Retailers need to know that modern, proven solutions are available to ease the burden of liquidating excess, returned, and overstock inventory.

B-Stock provides retailers an online auction platform that enables them to increase their recovery rates by selling returned merchandise to qualified resellers. The auction platform provides a transparent marketplace that retrieves the highest possible value for the merchandise.

B-Stock currently operates B2B liquidation marketplaces for nine of the top 10 U.S. retailers. In 2018 alone, we added 19 new marketplaces to our network. Because of the better pricing achieved on the inventory, more of these retailers are opting to push returned goods directly to their liquidation marketplace (versus refurbishing, returning to vendor, or processing back on shelf). This is especially true after the holidays, when return rates spike.

For example, when looking at our data, there is a large uptick in inventory following the holidays; the majority of it being returned merchandise. Historically, we see 60% more items listed in Q1 (January-March) versus Q4 (October-December). Sidebar: the most common returned items that end up on our marketplaces post holiday include: women’s trendy apparel, speciality kitchen items, tools, seasonal items, and toys.